CBSE Class 12-commerce Answered
When the supply curve is perfectly elastic, the demand
curve shifts and the price remain unchanged. Justify the statement.
Asked by Topperlearning User | 26 Apr, 2016, 07:36: AM
Expert Answer
Perfectly elastic supply means where the supply is unlimited at a given price level. In this situation, an increase in demand will shift the demand curve towards right. There will not be an excess of demand because at the existing price, the supply is infinite. If there is decrease in demand there will be a shift in the demand curve towards left and the price will not decrease. Because a small decrease in price level will lead to zero supply curve in this situation. Hence, the price remains constant.
Answered by | 26 Apr, 2016, 09:36: AM
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